February 28, 2013

A Simple Look At New, Discontinued, and Carryover Merchandise

It's a simple table, really.

And yet, it tells us an amazing amount of information.

This is a business that is being killed by the merchandising team.

I like to look at what I call the "carryover ratio" ... comparing how carryover product performed last year, vs. two years ago.
  • 2011 Carryover Ratio = 74,382,048 / 87,443,297 = 85%.
  • 2012 Carryover Ratio = 69,483,920 / 86,854,900 = 80%.
The stuff the merchants decided to keep performed at 80% of prior year levels in 2012.  A year ago, the carryover ratio was 85%.  This tells us that what the merchandising team kept is dying at a faster rate than in the past.

Look at the number of newly introduced products, year-over-year.
  • 2011 = 845 items.
  • 2012 = 749 items.
Your merchandising team doesn't have enough new product in the pipeline.  Look at demand per item for new merchandise.
  • 2011 = 17,910,854 / 845 = $21,196.
  • 2012 = 14,559,047 / 749 = $19,438.
Not only did your merchandising team throttle new product development, the new items they introduced performed close to 10% worse than last year.

I also like to look at the ratio of new merchandise demand to discontinued merchandise demand.
  • 2011 Ratio = 17,910,854 / 4,772,277 = 3.75.
  • 2012 Ratio = 14,559,047 / 5,438,002 = 2.68.
New merchandise is not generating enough of a multiplier against discontinued merchandise.

These are easy metrics to acquire.  Go acquire them, analyze 'em, see if merchandise is your problem (hint, it usually is).

No comments:

Post a Comment

Note: Only a member of this blog may post a comment.

It's Time! The February Run of the MineThatData Elite Program

Four months go by quickly, doesn't it? In this run of the MineThatData Elite Program, we'll cover the usual metrics that evaluate th...